Information Sharing in Banking: A Collusive Device?

Swedish School of Economics and Business Administration, Department of Economics, Economics

en

dc.contributor.author

Gehrig, Thomas

dc.contributor.author

Stenbacka, Rune

dc.date.accessioned

2011-03-02T13:56:15Z

dc.date.available

2011-03-02T13:56:15Z

dc.date.issued

2000

dc.identifier.isbn

951-555-648-1

dc.identifier.issn

0357-4598

dc.identifier.uri

http://hdl.handle.net/10227/134

dc.identifier.uri

URN:ISBN:951-555-648-1

dc.description.abstract

We show that information sharing among banks may serve as a collusive device. An informational sharing agreement is an a-priori commitment to reduce informational asymmetries between banks in future lending. Hence, information sharing tends to increase the intensity of competition in future periods and, thus, reduces the value of informational rents in current competition. We contribute to the existing literature by emphasizing that a reduction in informational rents will also reduce the intensity of competition in the current period, thereby reducing competitive pressure in current credit markets. We provide a large class of economic environments, where a ban on information sharing would be strictly welfare-enhancing.